Two Chem Plays Have News on Their Side

Air Products (APD - commentary - Cramer's Take) and Airgas (ARG - commentary - Cramer's Take) hold up more than any other industrial stocks, including today. The rally has been mystifying for those who believe that these are just GDP plays. What gives?

I will tell you what gives: Page B3 of the Journal gives. That's the "Occidental Petroleum Strikes Texas Deal" story, where carbon dioxide is being injected in one of the oldest fields in the country, the Permian Basin. Like most old fields in this country, there's plenty of oil and gas in them thar holes. But it's been way too expensive to get at, and we lacked the technology to get at it.

Now we have it: It involves pumping in carbon dioxide to get at the remaining oil. It works, but carbon dioxide is in short supply. In fact, this deal works because they plan to build a plant with SandRidge Energy (SD - commentary - Cramer's Take) that will produce carbon dioxide.

What does this all have to do with Air Products and Airgas? They have the carbon dioxide needed to flush out this oil and gas. It's what these companies do. Not only that, but the alternative is water, and increasingly I believe the big states where the oil is now being pumped -- like the Pennsylvania/New York part of the Marcellus shale -- are going to block the extensive use of their own water for this. Depleted reservoirs and declining water tables make water unrealistic after a certain point.

When you read these stories, you have to understand that Air Products and Airgas are the answer. They both are able to put through big price increases because of how important the carbon dioxide is to the process.

Of course these companies aren't just CO2 providers. They are also providers of a ton of the gases we need to refine oil and make steel. Plus, they have great health care businesses, which are totally non-cyclical.

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